Inventories Look Historically Lean Compared To Sales, But Appearances Deceive

Inventories and sales data from the commerce department, chart by Mish

Historically speaking, the inventory-to-sales ratio is very low (see chart below). 
 

Inventory-to-Sales Ratio 

Inventories and sales data from the commerce department, chart by Mish

The latest data is from March. I excluded auto dealers because they are having one heck of a time due to chip shortages.

Elsewhere we see "just-in-time" on steroids with an inventory-to-sales ratio of 1.12. 

Recently, inventories have been rising faster than sales. And what if sales falter? 
 

Top 20 Importers 

List of top 20 container importers into US. Many on this list have excess inventories, which likely means their maritime volumes will drop as they work off excess inventory. The top 20 container importers represent approx 25% of maritime container volume imports into US. pic.twitter.com/YvLne5ingZ

— Craig Fuller 🛩🚛🇺🇦 (@FreightAlley) May 26, 2022

"List of top 20 container importers into US. Many on this list have excess inventories, which likely means their maritime volumes will drop as they work off excess inventory. The top 20 container importers represent approx 25% of maritime container volume imports into US."
 

What About Amazon? 

Nice.

No Amazon?

— Tom Pagel (@tkpagel) May 26, 2022

 

Supply Chains Won't Return to Normal

The world has enjoyed a period of unparalleled growth, peace, and excess and that has allowed for smooth running supply chains. Those days are behind us and we are entering a world with far more supply chain shocks, instability, and uncertainty. https://t.co/GlCPsEhevz

— Craig Fuller 🛩🚛🇺🇦 (@FreightAlley) May 18, 2022

 

Shipping Slows 

If you want a good proxy on Asia to US imports, the @PortofLA provides a good dashboard of volume and activity. It is free to the public. If you check the numbers often enough, you can see the volumes of containers continue to slow. https://t.co/e9ADZlEiUl pic.twitter.com/ptbtSGu2w9

— Craig Fuller 🛩🚛🇺🇦 (@FreightAlley) May 26, 2022

 

Weird Season 

We are starting to use alternate routings as of this month, avoiding LALB given their July contract expiry.

— ERS (@eshow1969) May 26, 2022

 

The Big Kicker 

Supply chain head of a major retailer this week. "A lot of items in excess inventory are seasonal & big-ticket. Rather than heavy discounting, we are more likely to warehouse these goods until they sell. It will mean slower shipping volumes, probably most notable in Q4/Q1."

— Craig Fuller 🛩🚛🇺🇦 (@FreightAlley) May 26, 2022

 

"A lot of items in excess inventory are seasonal & big-ticket. Rather than heavy discounting, we are more likely to warehouse these goods until they sell. It will mean slower shipping volumes, probably most notable in Q4/Q1."

Really!? 

Let's discuss the recent data.
 

Target Plunges 25%, What About Yesterday's Big Retail Sales Blowout?

The advance retail sales reports by the commerce department were stunning. Reports by Target and Walmart strongly suggest something else.

For discussion, please see Target Plunges 25%, What About Yesterday's Big Retail Sales Blowout?
 

New Home Sales Plunge 22.5% In April, 16.6% From Deep Negative Revisions

Please note New Home Sales Plunge 22.5% In April, 16.6% From Deep Negative Revisions

What will that do to demand for appliances, carpet, furniture, lawn mowers, etc,? 
 

Frantic Discounts Coming   

 "Rather than heavy discounting, we are more likely to warehouse these goods until they sell."

I expect that idea to explode in a big wave of frantic discounts.